For this edition of Weaver’s Beyond the Numbers, Brad Jay, Weaver’s Partner-in-Charge of Manufacturing and Distribution Services, tapped Frank Cinatl, CFO of ABATIX, Vince Rullo, CFO of Howard Supply Company, and Matt Nafziger, CFO of Royal Manufacturing to give their perspective on how manufacturing and distribution companies are weathering the COVID-19 storm. What does the post-pandemic outlook look like, and what can companies do to remain responsive to client needs in the face of continued change?
At the outset of the pandemic, Rullo said Howard Supply took the time to work with their bank to address cashflow as well as vendor and customer needs along the way. “We took the opportunity to be as transparent as we can with our lender, which I think bared a lot of fruit. Our negotiations turned out to be positive in the sense they saw our treatment of our receivables as something critically important, not only for ourselves but for the bank.”
When PPP loans became available at the start of the pandemic, the question facing companies was if they should apply for one. “We sell PPE products predominately to contractors in the manufacturing industry,” Cinatl said. “The first part of the year was going great for us. When COVID hit, people were coming out of the woodwork, looking for PPE.” Supplies began to dry up, and with PPE masks designated for health care, ABATIX didn’t have masks to sell to their base. ABATIX did apply for a PPP loan, got approved, and was funded. But as the finer details about the program became clearer, ABATIX decided it was better to put this option in their back pocket, and they repaid the loan as soon as it was received.
The panel of CFOs agreed that a best practice for maintaining financial stability during the pandemic was to ensure the accounts receivables did not fall behind. “We had a mechanism in place for this process; we call ‘at risk’,” Nafziger said. “Every two weeks, we look at anything that is over 90 days old, and we designate it as something that is at risk. That goes out to our entire executive management team, and we review it.” Open communications internally and externally with those clients at risk proved useful.
Accounting for Uncertainty Virtual CPE Series: Manufacturing and Distribution Breakout: CFO Panel, The State of Manufacturing / Distribution Markets During COVID-19 and Beyond
Manufacturing and distribution companies are certainly feeling the effects of COVID-19 with many businesses overwhelmed by the significant swings…